Graphics and pictures cannot be made transparent in ArcMap

Description

Graphics created using tools from the ArcMap graphics toolbar and pictures inserted by way of the Insert > Picture menu cannot be made transparent.

Cause

This is a known limitation. An enhancement has been submitted to include this functionality.

Workaround

• For inserted raster pictures such as BMP and JPEG, add them as data into the data frame and apply transparency to the layer.
• At 9.3+, convert the graphics created in ArcMap to features and apply transparency to the layer. See the link to the ArcGIS Desktop Help topic in the related information section below.